Thursday, July 20, 2017

Q2 2017 Portfolio Update

It's midway through July and here I am typing out my Q2 2017 Portfolio Update. I have the necessary data but I was too lazy to slice and dice the data and organize it into a coherent post. Guess I'll be doing it today.

I'm using Kyith's Stock Portfolio Tracker and dividends received are presented in a yearly format. In my last quarter update, I had to manually slice and dice the data in order to present the same information in a quarterly format. I spent yesterday night writing a R script to automate that process. Now quarterly updates will be that much more simpler.

Here are the outputs of my R scripts (history of dividends received by Year/Quarter in SGD and USD, respectively):



Moving forward, I foresee a huge drop in the dividends received. I did some thinking in end April/early May as to how I would react to a market correction. Previously, I was convinced that come hell or high water, I would just average down on every single counter that I own. It was at that point that I realized I need a huge boatload of cash to really make it viable.

Let's assume the following fictitious scenario. Say you have 1000 shares of counter A, which trades for $1. Come recession, counter A drops 50% to $0.50. You add another 1000 shares at $0.50 to "average down." What gives? You effectively double your position size in said counter and the average price is just midway between both purchase prices. To tilt the average price towards the recession price, you need to pump in even more cash, with increasing amounts of cash yielding a decreasing impact on the average price. This is a simplistic scenario, but it made me confront an ugly truth. Do I even have cash in the sidelines that equals my portfolio size waiting to be deployed? Nope.

So, I began selling a portion of my portfolio. Am I right? I haven't the faintest idea. 

In the following cases, returns are computed using Excel's XIRR function.

Complete divestment
Counter: STI ETF
Holding Period: 21 Months
Returns: 4.87%
Thoughts: This is me being "desperate" to deploy my cash and to "make my money work hard for me." I entered the STI ETF at a high, and averaged down once when it hit the bottom. This is the end result. Compare this to the next case.....

Counter: Nikko AM STI ETF
Holding Period: 26 Months
Returns: 9.60%
Thoughts: Interesting eh? This is me using the POSB Invest Saver to DCA into the Nikko AM STI ETF. The difference in returns compared to the above is huuuugggeeee!

Counter: Hong Leong Finance
Holding Period: 14 Months
Returns: 10.87%
Thoughts: I lucked out on this one. I've been eyeing this counter while it was languishing at its 52-week low. Instead of buying it, I was happily chasing REITs at that point in time (higher yield mah!). It was only when the stock price shot up that I panicked and entered at a much higher price. This news also helped me to exit the counter with a profit. I just hope I won't make the same mistake of chasing a stock up again.

Counter: United Industrial Corporation
Holding Period: 4 Months
Returns: 28.33%
Thoughts: Meant to be an asset play, but I'm not sure how well do asset plays fare during recessions. With a minuscule yield, it's better to re-enter at a lower price than to average down.

Counter: iFast Corporation
Holding Period: 10 Months
Returns: -2.41%
Thoughts: I entered this counter when it dipped below its IPO price. That was when it was at its 52-week low. Then, it hit another 52-week low, and then another, and another. As such counters are hit hard during corrections, I cautiously averaged down with a token sum. The big guns are supposed to be fired in market corrections, not as and when the stock price goes down. When its fortune finally reversed, I vacillated as to the price of divestment. I could have waited until it broke even, but I found it more comfortable to have cash back in hand first. This brings me to......

Counter: T Rowe Price
Holding Period: 2 Months
Returns: -1.73%
Thoughts: In corrections, mutual fund companies are hit quite hard. This is further exacerbated by the outflow of money from mutual funds to passive ETFs. Still, the firm is doing quite well (relative to its peers). This sale shows my priorities. In a correction, I would allocate my money to higher-yielding S-REITs; "patching the wall" on T Rowe Price is the least of my concerns.

Counter: Mandarin Oriental International
Holding Period: 2 Months
Returns: 31%
Thoughts: This news probably bumped up the price. And also, I'm playing it cautious by taking profits and having more cash on hand. Last I checked, the hospitality industry doesn't fare that well in recessions.

Counter: OUE Commercial REIT
Holding Period: 21 Months
Returns: 8.79%
Thoughts: This is the very first hand-picked stock I purchased. Back then, when I was more uninformed, I relied more heavily on the discount to book value. It's sheer dumb luck that it turned out well.

Partial Divestments
Counter: Accordia Golf Trust
Sold 2/3 of my stake

Counter: Croesus Retail Trust
Sold 2/3 of my stake (this was before the announcement of the potential privatization by Blackstone)

Counter: Sheng Siong Group
Sold 1/2 of my stake

Counter: Lippo Malls Indonesia Retail Trust
Sold 30% of my stake

Counter: AIMS AMP Capital Industrial REIT
Sold 50% of my stake
Thoughts: Phew! At one point, this counter took up a whooping 20% of my portfolio. With its reduced size, I am now less jittery.

Counter: Frasers Centrepoint Limited
Sold 50% of my stake

All counters which were partially divested were sold at a profit (inclusive of capital gains + dividends received).

The Bleeding ones
J.M. Smucker and Hormel Foods are bleeding, but this is no cause for concern.

QAF and Raffles Medical Group are bleeding because of poor self-control on my part. That's what I get when I can't wait for a better entry price and try to nibble on them.

Vicom and Neratel are the two longer-term underperformers in my portfolio.

That's all for now. It's time to busy myself with my career, school, personal development, and other hobbies while I build my war chest. That way, I won't be too upset having killed the golden goose.

7 comments:

  1. Hi Unintelligent Nerd,

    What a move! Preparing for a huge storm huh? The question is when will it happen? The angel in me hope you did the right thing while the devil... On a side note, we have identical bleeding stock - Raffles Medical. Hahahaha.

    ReplyDelete
    Replies
    1. Hi KPO,

      Sooner or later it will happen lah. I not nimble enough, so it's better for me to cash out first. I'm the grateful sort yah, mini profits like that I happy can liao. :P

      Delete
  2. In my opinions a lot of companies are releasing their q2 earnings. Might be worth a wait to read up the latest update before reaching buying selling decision. Good to work with more information than less.

    ReplyDelete
  3. Hi INTJ,

    I am done with selling for now.

    Am holding on to the rest for dividend income.

    ReplyDelete
  4. Hi un

    May i know why u want to sell away hong leong finance while it give u about 4% div yield with ur price & get 10% capital return also?
    I am vested in hong leong fin also, little bit only. I get div & capital gain is green also. I still newbie just want to learn the reason u sell...

    Thanks
    Sy

    ReplyDelete
    Replies
    1. Hi Sy,

      My position in Hong Leong Finance was also a small one. From what I observed, during market crashes, banks and finance counters are hit hard. I wanted to take profit first before that happens.

      Anyway, I did not enter the counter at a good price. I was eyeing it but only entered after it ran up quite a bit. It was impatience on my part. So when I had a chance to unload, following the introduction of the MAS ruling, as well as taking a few rounds of dividends, I chose to do so.

      Hope this helps.

      Cheers

      Delete
  5. Hi un

    Thanks for telling me the reason. I see some people start to hold more cash n sell away their holding... so i thinking to sell or not...

    ReplyDelete